Implementation of Smart Specialisation Strategies in Portugal: An assessment
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Implementation of Smart Specialisation
Strategies in Portugal: An assessment
Laranja, M
Edwards, J
Pinto, H
Foray, D
June 2020
EUR 30287 ENThis publication is a Technical report by the Joint Research Centre (JRC), the European Commission’s science and knowledge service. It aims to provide evidence-based scientific support to the European policymaking process. The scientific output expressed does not imply a policy position of the European Commission. Neither the European Commission nor any person acting on behalf of the Commission is responsible for the use that might be made of this publication. For information on the methodology and quality underlying the data used in this publication for which the source is neither Eurostat nor other Commission services, users should contact the referenced source. The designations employed and the presentation of material on the maps do not imply the expression of any opinion whatsoever on the part of the European Union concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Contact information Name: John Edwards Address: c/ Inca Garcilaso, 3 Edificio Expo Email: john.edwards@ec.europa.eu Tel.: +34 9544 87163 EU Science Hub https://ec.europa.eu/jrc JRC121189 EUR 30287 EN PDF ISBN 978-92-76-21047-4 ISSN 1831-9424 doi:10.2760/903016 Luxembourg: Publications Office of the European Union, 2020 © European Union, 2020 The reuse policy of the European Commission is implemented by the Commission Decision 2011/833/EU of 12 December 2011 on the reuse of Commission documents (OJ L 330, 14.12.2011, p. 39). Except otherwise noted, the reuse of this document is authorised under the Creative Commons Attribution 4.0 International (CC BY 4.0) licence (https://creativecommons.org/licenses/by/4.0/). This means that reuse is allowed provided appropriate credit is given and any changes are indicated. For any use or reproduction of photos or other material that is not owned by the EU, permission must be sought directly from the copyright holders. All content © European Union, 2020 How to cite this report: Laranja, M., Edwards, J., Pinto, H. and Foray, D., Implementation of Smart Specialisation Strategies in Portugal: An assessment, EUR 30287 EN, Publications Office of the European Union, Luxembourg, 2020, ISBN 978-92-76-21047-4, doi:10.2760/903016, JRC121189.
Contents
Acknowledgements ..................................................................................................................................................................................................................................3
Abstract ..............................................................................................................................................................................................................................................................4
Executive Summary .................................................................................................................................................................................................................................5
1 Introduction.........................................................................................................................................................................................................................................11
1.1 Context and purpose of the report ....................................................................................................................................................................11
1.2 Objective and focus ........................................................................................................................................................................................................11
1.3 Organisation of the report ........................................................................................................................................................................................11
2 Concepts and Methodology...................................................................................................................................................................................................12
2.1 S3 fundamentals ..............................................................................................................................................................................................................12
2.2 A three step guide to S3 and entrepreneurial discovery ................................................................................................................13
2.3 Policy Governance of Smart Specialisation Strategies ....................................................................................................................15
2.4 Monitoring and Evaluation........................................................................................................................................................................................17
2.5 Smart Specialisation as a condition for the use of European Structural Investment Funds on Research
and Innovation .................................................................................................................................................................................................................................18
2.6 Assessment questions and methodology ....................................................................................................................................................19
3 Overview of S3 governance in Portugal at national and regional levels: Does S3 set innovation and
knowledge based priorities? ..........................................................................................................................................................................................................21
3.1 Governance of S3 initial elaboration at national and regional levels.................................................................................21
3.2 How S3 was operationalised ..................................................................................................................................................................................29
3.3 Overview of recent changes in National Research and Innovation Policies ..................................................................30
3.4 National and multi-level governance of S3 implementation .....................................................................................................33
3.5 Regional Governance of S3 implementation: comparison between regions ................................................................36
3.6 Assessment: Overview of National and Regional S3 Governance at initial elaboration and at
implementation ...............................................................................................................................................................................................................................38
4 Entrepreneurial Discovery Processes............................................................................................................................................................................42
4.1 National S3 EDP ................................................................................................................................................................................................................42
4.2 Regional S3 EDP processes......................................................................................................................................................................................42
4.3 Assessment: EDP processes and National and Regional levels ...............................................................................................44
5 Monitoring ............................................................................................................................................................................................................................................48
5.1 Monitoring of National S3.........................................................................................................................................................................................48
5.2 Monitoring of Regional S3 ........................................................................................................................................................................................49
5.3 Assessment: Monitoring practices at national and regional levels .......................................................................................50
6 Recommendations ........................................................................................................................................................................................................................52
6.1 Rebalance the governance structure ...............................................................................................................................................................52
6.2 Refocus national and regional S3 ......................................................................................................................................................................53
6.3 Reinforce practices of EDP .......................................................................................................................................................................................54
6.4 Improve Monitoring.........................................................................................................................................................................................................55
References ....................................................................................................................................................................................................................................................56List of abbreviations and definitions.....................................................................................................................................................................................59
List of figures ............................................................................................................................................................................................................................................61
List of tables...............................................................................................................................................................................................................................................62
Annex 1. Assessment questions used for this assignment................................................................................................................................63
Annex 2. List of actors interviewed ........................................................................................................................................................................................67
Annex 3. Interview Guides...............................................................................................................................................................................................................69
S3 Alentejo ..........................................................................................................................................................................................................................................71
S3 Algarve............................................................................................................................................................................................................................................73
S3 Azores ..............................................................................................................................................................................................................................................75
S3 Centro ..............................................................................................................................................................................................................................................77
S3 Lisbon and Tagus Valley .................................................................................................................................................................................................79
S3 Madeira ..........................................................................................................................................................................................................................................82
S3 Norte.................................................................................................................................................................................................................................................84Acknowledgements
This report could not have been written without the active involvement of the Portuguese regions who took
part in and facilitated interviews, focus groups, site visits and access to documents. We would also like
acknowledge the comments and support of André Pestana dos Santos from DG Regional and Urban Policy, as
well as Mark Boden from the Joint Research Centre. Hugo Pinto acknowledges the financial support of FCT—
Portuguese Foundation for Science and Technology to his research (Scientific Employment
DL57/2016/CP1341/CT0013).
Authors
Manuel Laranja, ISEG, Lisbon University
John Edwards, Joint Research Centre, European Commission
Hugo Pinto, Centre for Social Studies, University of Coimbra and Faculty of Economics, University of Algarve,
Portugal
Dominique Foray, École Polytechnique Fédérale de Lausanne (EPFL)
3Abstract
This report assesses the implementation of Smart Specialisation in Portugal, comparing the situation today
with 2013. In that year a multi-level framework was designed that included a national and seven regional
Smart Specialisation Strategies (S3). The role of regions in research and innovation policy was much less
advanced in Portugal than other (Western) European countries, but a logical step to implement a concept that
gives local actors a prominent role in strategy development through a process of entrepreneurial discovery.
Smart Specialisation is a difficult concept to implement successfully because it crosses policy responsibilities
and geographical levels. This report finds that a number of problems in the governance of S3 implementation
accentuated these difficulties in Portugal: a governance structure that was never really activated; a policy
mix constrained by the legal framework governing R&I spending by the European Structural and Investment
Funds, preventing a flexible place based approach that responds to local entrepreneurial discovery; a basic
form of monitoring that only analyses project alignment to priorities rather than the achievement of strategic
objectives; a fragmented national strategic framework for R&I policy; and a lack of human resources to
implement what is a challenging policy approach. The Portuguese regions did however learn from this first
phase of Smart Specialisation and there have been some interesting and innovative attempts to instigate
entrepreneurial discovery processes, work with other European regions and build capacity for managing
innovation strategies. The report recommends that S3 in Portugal is fundamentally reset to embrace a more
enterprise led model of innovation. This requires a much stronger governance framework including an active
inter-ministerial committee led by the Ministry of Economy and a larger mandate for the National Innovation
Agency. At regional level the S3 management teams need to be substantially reinforced and act more like
development agencies than regional authorities, taking a pro-active approach to working with firms and
monitoring the progress of their strategies. The National Innovation Agency should support the regional
management teams in these tasks by enhancing their capabilities and facilitating inter-regional cooperation.
The conclusion of this report is that these type of fundamental changes are important to set Portugal on the
right track to fully benefit from Smart Specialisation post-2020.
4Executive Summary
Smart Specialisation Strategies1 – S3 allow countries and, especially, regions to develop and consolidate
economic strengths based on their local knowledge and innovation capabilities. The goal of an S3 is to
concentrate knowledge and innovation resources in a limited number of (new and existing) domains in order
to enhance the local capabilities that feed innovation and social and economic development.
A key feature of this policy approach is that the design and implementation of S3 should not rely on
traditional centralised policy making but, instead be combined with an Entrepreneurial Discovery Process
(EDP). Inspired by Hausmann and Rodrik’s (2006) idea of “self-discovery processes”, an EDP engages all
relevant interest groups in a search and discovery process to identify knowledge “domains” and economic
activities with the potential to become drivers of socio-economic structural change.
Following the Communication “Regional Policy contributing to Smart Growth in Europe” (European
Commission, 2010), the Cohesion Policy regulations for the 2014-2020 programming period require a
national and/or regional S3 as an ‘ex-ante conditionality’ for spending the European Regional Development
Fund (ERDF) on Research and Innovation (R&I) projects. The Commission’s proposals for the 2021-2027
programming period include criteria for the good governance of S3 as an ‘enabling condition’ for spending
the ERDF on the new ‘Smart Growth’ policy objective COM(2018) 375.
Aim, method and scope
Given the focus of the proposed regulations, this report provides an assessment of the current situation in
Portugal with regard to S3 governance, as well as the related issues of monitoring and practices of
entrepreneurial discovery. It is based on empirical research carried out in 2019 (with the exception of Centro,
which took place in 2018), on the initiative of the Joint Research Centre and DG Regional and Urban Policy.
The research included the following forms of data collection:
Analysis of the S3 documents, PT2020 instruments and data.
Focus groups in each region.
Individual semi-structured interviews.
The research was based on the following assessment questions that concern both policy design (the process
of initial definition of priority-domains and the governance structure) and implementation:
1. What were/are the governance structures in place, at National and Regional level at initial
elaboration and during implementation? How have the structures functioned, including the
involvement of stakeholders? Has there been effective coordination of the S3 framework between
regional and national levels as well as between regions?
2. Has the Entrepreneurial Discovery Process been effectively implemented? How has this differed
between national and regional levels? Has the EDP led to revision of priorities, governance or the
policy mix?
3. What kind of monitoring and evaluation activities have been carried out? Is there a specific follow-up
monitoring of the implementation of ESIF funded projects, to make sure they contribute to S3? What
types of indicators are set to ensure the measurability of the contribution of the projects to the S3?
The report provides a comparison between the seven Portuguese regions (including the five continental
administrative regions and the two self-governing archipelagos of Azores and Madeira), comparing the
situation today with when the S3 approach began in 2014, leading to an assessment of if and how S3 have
had an impact on the different regional economies.
1
The term Research and Innovation Strategies for Smart Specialisation (S3) is also widely used, including as the title
of the national and regional strategies in Portugal, but in this report we use Smart Specialisation Strategies (S3) as
referred to in the EU regulations.
5Summary of findings
The initial elaboration of S3, both at national and regional levels marked a significant shift in policymaking
towards an evidence-based approach and an attempt to break with existing top-down R&I policies based on
scientific excellence and technology transfer. It also brought greater participation of stakeholders into the
policy making process, through multiple thematic sessions involving many actors. Based on Commission
guidance (Foray et al., 2012), designing the strategy started with extensive and detailed national and
regional diagnostics using statistical and other types of evidence. Although there was engagement with
different types of stakeholders (both at national and regional level), this mostly involved discussion and
validation of the SWOT diagnostic and choice of priorities put forward by national or regional authorities. It
cannot be described as a truly participatory process of discovery and co-design. The S3 elaboration process
resulted in an excessive number priority-domains, both at national and regional level, and their definition was
mostly too broad to provide a focused vision to guide the development of specific knowledge-based
innovation trajectories with the potential to effectively generate related variety and structural change.
At regional level, particularly for regions with less capacity and scarce R&I resources we would expect a lower
number of priorities with a higher degree of granularity, focused more on enterprises or the ‘Doing-Using-
Interacting’ mode of innovation (Jensen et al., 2007). However, the priorities are broadly defined and lean
towards a scientific and technological mode of innovation. More importantly, the absence of governance and
monitoring mechanisms prevents priorities being refined or modified as new information and ideas emerge.
This makes it much more unlikely that the strategies lead to place based social and economic development.
In terms of policy mix, the S3 in Portugal have been implemented through a complex matrix of alignment and
selectivity criteria, applied to a large set of 23 standardised funding instruments under TO1 and TO3 (also to
a lesser extent under TO8 and T10). Unfortunately, at the time that the S3 framework was finalized in 2014,
the ESIF instruments in Portugal (called PT2020) were already set and there was no possibility to explore a
wider mix of instruments. Furthermore, regions were unable to adjust the funding instruments to their
specific needs. In this way, S3 was not as an overarching strategy for national/regional innovation, but mostly
a means for project applicants to access the ESIF.
Therefore, in our view, the S3 framework currently in place at national and regional levels falls short of
achieving a much-needed strategic focus on vertical priorities that enable entrepreneurs to exploit knowledge
by applying it to economic activities, including products, services, processes and business models. As a result,
we recommend that the Portuguese authorities revise the S3 framework in order to become a truly
overarching strategy focused on applying, rather than generating knowledge, across a reduced number of
priorities.
Governance structures and S3 management
Portugal adopted a multi-level approach to S3 with a national strategy (ENEI) and seven regional strategies
(EREI). The governance of Portugal’s overall S3 strategic framework is composed of an Inter-ministerial
Commission for S3 and two higher advisory councils – the National Council for Entrepreneurship and
Innovation (CNEI) and the National Council for Science and Technology (CNCT). However, we found no
evidence that this S3 Inter-ministerial Commission has been operational and while the composition of the
two higher advisory councils looks balanced in terms of private and public sector organisations, these
councils have not been active since 2015. At the implementation level, the ENEI created an Executive
Committee with more than 30 members. The National Innovation Agency (ANI) chairs the Executive
Committee and hosts the ENEI secretariat. However only one person – the national ENEI coordinator –
appears to be dedicated full time to the task of implementing the national strategy and coordinating with the
regions. It appears that agendas and minutes have not been published, but understand that since 2014, the
Executive Committee met three times. Given its size and composition, it is difficult to assemble such a large
and diverse committee and therefore it provides little or no operational support to the management of S3,
which in practice is the task of ANI, yet it has very little resources. In summary, at the national level, the
governance structures and bodies would need significant reinforcement in order to ensure effective
coordination.
At the regional level, S3 has had a significant impact on local governance structures, with the creation in
almost every region of Regional Innovation Councils. However, in most cases, the regions convened the
councils only recently and there is a clear deficit of private sector participation. In particular, for regions with
6low business density and many SMEs that lack absorptive capacity, this private sector deficit leads to a
disproportionate influence on the Regional Innovation Council (and on the overall direction of S3) from public
sector organisations in general and from local universities in particular.
Regional S3 also have a serious deficit of human resources in the management teams. In our interviews, we
noticed that because S3 implementation is reduced to checking whether PT2020 project proposals comply
with the defined alignment and selection criteria, people from the regional OP management units are
considered S3 managers. A strong relationship between S3 governance and OP management may effectively
bring better strategic alignment and effective articulation between the strategic and the operational levels.
However, overall S3 management teams do not appear to have sufficient resources to execute their main
task, which is promotion of their local entrepreneurial discovery processes and monitoring of their strategies.
Multi-level governance
Regarding multi-level governance at the initial stage, it would have helped if the national S3 (ENEI) had more
fully explored the thematic alignment with the priority-domains proposed by the regions in their S3 (EREIs). In
addition, at the implementation stage, the national level could do much more to promote potential
collaboration between the different regions in areas of common research and innovation interests. Such
cooperation is particularly important to mitigate the risk of duplicating similar projects and infrastructures,
particularly when each individual initiative is unable to achieve the critical mass needed to be effective at the
national and international levels. In other words, the ENEI could do much more to promote interregional
collaboration leading to investment optimisation.
From our interviews, we learned that there is a degree of multilevel governance and communication between
national and regional levels, instead of being channelled through the governance structures designed for S3
i.e. the ENEI Executive Committee, it works through the operational networking groups of COMPETE2020.
These groups were created to help articulate the funding instruments of the national/ thematic OPs. Hence,
because S3 is not operationalised as a strategy but simply as a set of alignment and selection criteria for
project funding, S3 multi-level coordination works outside the strategic S3 governance structures designed in
the ENEI (and which satisfied the ex-ante conditionality). In addition, because the PT2020 networks were
created to ensure compliance, conformity and standardisation of project funding across instruments and OPs
as well as the correct and effective disbursement of funds, we find that this current multi-level arrangement
needs substantial upgrading in order to allow for coherent national and regional strategic management of
S3.
Another key problem is that there is little flexibility to use specific regional or national instruments such as
thematic funding calls within the priority-domains, resulting from the EDP. In our view, effective S3
implementation requires specific thematic instruments that are differentiated between regions and that can
be adjusted according to their priority-domains. However, until now S3 has been mainly implemented through
general calls for standardised instruments that combine funds from national and regional OPs, with extra
points for proposals contributing to specific EREIs or the ENEI. Moreover, the extra points contribute relatively
little to the overall score given to a proposal.
Finally, since 2015 a multiplication of new general science and innovation agendas and initiatives have
created a fragmented strategic Science and Innovation policy framework that limits the effectiveness of
public investment in R&I. This recent multiplicity of national agendas and plans stems from cleavages
between different ministries of the current government and, as pointed out by the OECD (2019a), has
prevented Portugal adopting a consistent strategy. What this means is that S3, particularly the national
strategy, appears to compete with this wave of new top-down general agendas and strategies. In essence,
and probably because S3 was operationalized as a set of alignment and selection criteria for accessing
funding, national/regional S3 cannot be taken as overarching shared national/regional innovation strategies.
In addition, because all the subsequent innovation strategies also use the ESIF as their main instrument for
implementation, PT2020 is only loosely connected to the strategic orientations.
To summarise, in our view Portugal would significantly gain in terms of policy effectiveness if it moved
towards fully implementing a single and integrated strategic innovation policy framework based on a focused
view for S3, catering for S3 formulation and implementation at national and regional levels.
7Entrepreneurial Process of Discovery
At the time of the fieldwork in 2019 there were no active entrepreneurial discovery processes, attempts to
exploit national technology resources across regions and priority domains, nor processes for identifying
nation-wide/horizontal initiatives that could mobilize socio-economic transformation. At the end of 2019 ANI
did launch a series of events called ‘Dynamics for Innovation’ covering nine of the 15 ENEI priorities, with two
more planned. If these events lead to permanent processes of entrepreneurial discovery then this would be a
very positive development, although as already noted, sufficient resources would be required.
At the regional level there are platforms or thematic discussion-groups operational in every region except for
Alentejo (not counting an interesting but incipient bio-economy forum). These platforms/groups are usually
initiated by the regional authorities and support regional EDP in different priority domains. However, these
platforms and thematic-groups were created quite recently (except Centro which established them earlier)
and therefore, beyond the initial meetings and workshops for definition of S3 priority domains in 2013/2014,
there were little or no attempts to continue the initial group dynamics. Therefore, we cannot say that there
are continuous EDP processes working since S3 inception in the Portuguese regions. In cases where the EDP
platforms/groups were assembled quite late, our impression is that the main motivation for this late start, is
not to launch a continuous EDP, but to undertake a “tick the box” exercise at the start of the process for
revision and eventual redesign of S3 for the 2021-227 programming period.
An interesting issue is that in most cases regional authorities such as Madeira and Lisbon outsource
coordination of these existing platforms/groups to academic professors and researchers. Only in a few cases,
local private sector companies were found to be coordinators. In cases where university-based researchers
coordinate EDP groups/platforms, the EDP and indeed the whole S3 appears to focus primarily on scientific
research capabilities of the local universities, overlooking the needs for “non-technological” innovation and of
upgrading capabilities in local SMEs.
In many cases, we were not able to obtain lists of participants that compose the platforms/groups, but it was
possible to learn that there is a need to overcome resistance to collective action and participation in these
processes, notably among SMEs. In all regions, participation of the private sector is low and particularly lower
in regions with a higher proportion of SMEs lacking capacity, such as in the Azores and Madeira. The objective
should now be to increase the involvement of the private sector, including low and mid-tech businesses,
whose needs are usually not based on technological innovation but are more related to enhancing their
operations and industrial skills as well as their managerial capabilities.
Current EDP process are implemented essentially through “events” and “meetings” that bring together actors
to discuss and debate new opportunities for technological development and innovation in the regions.
However, such meetings do not necessarily constitute an entrepreneurial discovery process. Search-
identification processes (of discovery) require higher levels of engagement and collective learning based on
deeper insights into the most appropriate, place based opportunities for innovation. Higher levels of
engagement could be obtained through the use of participatory methods to support the search, identification
and exploration of innovation opportunities.
While the more recent EDP platforms/groups are motivated by the need to revise and redesign S3 for the
2021-2027 funding period, in general, participants in the platforms see these processes as networking
mechanisms, strengthening university-business cooperation in the pursuit of opportunities for technology
transfer and innovation. In general participants in the platforms/groups do not perceive EDP as a means of
policy-input for the (re)definition of S3 domain-priorities.
Feedback from EDP platforms/groups to the regional innovation councils or to the regional authorities
regarding identification of projects and adjustments to the priority domains is still tepid. Nevertheless, it is
clear that the output of the work carried out by the current platforms and thematic groups could contribute,
and in regions such as the Azores, it is already contributing to the co-design of specific thematic S3 calls for
proposals. However, regional authorities usually face high resistance from the central agency ADC and
national OPs to any suggestions that imply a modification or adaptation of existing standardised funding
instruments.
Overall, because at the time of interviewing, we found no revised or adjusted S3 at national or regional levels
it is straightforward to conclude that EDP effectiveness in bringing changes to the original S3 formulation is
very low.
8Monitoring
Current monitoring activities at national and regional levels do not form what we would call a monitoring
system for strategic intelligence, due in particular to the existence of a fragmented governance framework
and a general lack of resources and skills for S3 operational management at national and regional levels.
At the national level, the first and only report produced by ANI published in 2019 (ANI, 2019) provides little or
no indication of whether the national S3 strategy is being accomplished. At the regional level monitoring
appears to focus on how well tuned are the funding instruments of the regional OPs and whether alignment
and selection criteria effectively capture projects classified by the broadly defined priority-domains. Hence,
what we find in every region is monitoring activities based on input indicators including the number and type
of projects funded (and not funded), investment amounts by type of instrument and by priority domain. We
find little or no monitoring activities enabling to understand how the regional/national contexts are (or not)
changing towards an intended specialisation, even if based on qualitative evidence.
This reductionist view of strategic monitoring, probably results from the original decision that
operationalization of S3 would be accomplished by just adding an administrative procedure concerning the
use of criteria for funding research and innovation projects, through multiple funding instruments in national
and regional OPs.
However, monitoring based only on input and execution data provides little guidance for future actions.
Current S3 monitoring practices do not use context information (early indicators) or report any reflections on
whether changes in specialisation trends (if any) can be associated to funded (or non-funded) projects. In
other words, existing monitoring is unable to determine whether the strategy is on track and if there is a
need for any adjustments or revisions. Consequently, there are almost no adjustments or changes to the
initially defined domains of specialisation and to the S3 implementation at national and regional level since
they were originally defined in 2013/2014.
When regional authorities referred to adjustments and/or redefinition of priority-domains, they highlighted
the low level of demand for project funding in some domains. However, it may be precisely because demand
is low that such domains are strategic in order to gain new capabilities that would enable regions to engage
in innovation trajectories of related variety, which again suggests that their current monitoring practices are
clearly insufficient to provide strategic intelligence.
Recommendations
The findings of our research lead us to recommend not just a refocus of national and regional S3 but also
fundamental changes in governance structures, in EDP and in monitoring practices.
At the national level, we recommend establishing one single high-level inter-ministerial commission in order
to support a wider cross-ministerial decision-making concerning S3. This inter-ministerial commission should
include the Ministry of Economy, the Ministry of Science and Higher Education and the Ministry responsible
for the ESIF. As S3 is a knowledge-based and innovation strategy for economic development (it is not a
Science and Research strategy), the Ministry of the Economy should take a clear leading role in this inter-
ministerial commission. Given the priority domains already identified during the first cycle of S3, in
2013/2014, the Ministries of the Sea, Agriculture, Forestry and Rural Development, as well as the Ministry of
Health should also have an important role in S3. Technical staff drawn from the different ministerial cabinets
would support this inter-ministerial commission. In addition, instead of two higher national councils for the
same policy (CNEI and CNCT), there should be just one single National Advisory Council for Innovation Policy,
composed by people (not organisations) known for their work as high impact entrepreneurs and innovators.
At the operational level a large executive committee, hosted by ANI currently manages the national S3.
Instead of this current large non-operational body, we recommend a more agile S3 management team
focused on EDP and strategic-monitoring. Such a smaller team needs the skills to perform the difficult task
of executive-coordination of the national S3 as well as building capacity in the regions.
The new governance structure should also provide a clearer definition of the role of fundamental agencies
such as ANI and the National Science and Technology Foundation (FCT). These bodies should help the
Management Team and the Inter-ministerial commission on S3 policy implementation by helping with EDP
and monitoring. Agencies such as AdC and management structures of the major thematic programmes
9related to research and innovation such as COMPETE2020, should also be involved, but it should be
understood that management of ESIF cannot substitute the need for S3 strategic steering.
At the regional level there needs to be changes to the composition and function of the Regional Innovation
Councils. These bodies are too large and dominated by public sector organisations and/or local universities. In
addition, the management teams at regional level require a much higher level of resources and political
leadership. There is also a need to disentangle strategic management of S3 from the administrative
management of the regional OPs. Management teams need to have the time and resources to support S3
implementation through organisation and facilitation of EDP processes and, in particular, need to establish
monitoring activities that feed strategic intelligence into the overall S3 management.
Current monitoring practices do not form what we would call a monitoring system aligned with S3 strategic
intelligence. At national level the single monitoring report available fails to provide relevant information to
inform our understanding of whether the national S3 is on track to achieve any of the specialisations
envisioned. It focuses only on how OPs fund projects aligned with the S3 priority domains. At the regional
level, monitoring activities also focus on how the regional OP supports projects aligned with S3 priority-
domains, hence also neglecting much needed information on early signs of possible effects that the S3 may
have on economic and social dynamics.
101 Introduction
1.1 Context and purpose of the report
The research for this report began in 2019 within the context of the European Parliamentary Action on
‘Support to S3 implementation in Lagging Regions’, managed by the Joint Research Centre (JRC)2. The
purpose was to understand more about how Smart Specialisation Strategies (S3) had been implemented in
the regions of Norte, Alentejo and Algarve, since Centro had been involved in the action from the outset in
2016 and much more was known about this region. The stocktaking exercise took place in 2019 and
coincided with preparatory work by DG Regional and Urban Policy for the enabling condition on good
governance of S3 included in the proposed regulations for the Cohesion Policy 2021-2027. Consequently, DG
Regional and Urban Policy decided to enlarge this stocktaking exercise to those regions not included in the
European Parliamentary Action, namely Azores, Lisbon and Tagus Valley3 and Madeira. Therefore, the
research in all regions followed the same methodological approach, with the exception of Centro for which
knowledge had been acquired over a longer period of time but which covered the same issues, including the
overall S3 framework in Portugal and the relationship between the national and regional strategies.
This document represents a consolidated stocktaking report on governance of S3 in Portugal, presenting
conclusions and recommendations to improve the implementation of Smart Specialisation at national and
regional levels. It is a JRC technical report, authored by external experts as well as JRC researchers.
1.2 Objective and focus
The overall aim of the research was to assess the state of play of S3 governance, monitoring and practices
of “entrepreneurial development processes” in Portugal. The specific objectives were to assess:
Objective 1: The monitoring and evaluation systems (e.g. is there a specific follow up of the implementation
of the projects to make sure they are contributing to the S3, what kind of monitoring? What types of
indicators are set to ensure the measurability of the contribution of the projects to the S3, etc.)
Objective 2: The functioning of the different S3 governance structures, including the participation of various
stakeholders in the different phases of S3 implementation, (initial elaboration, follow up, implementation and
revision) and the effectiveness of the Entrepreneurial Discovery Process in contributing to the design and
implementation of the national and regional strategies.
Objective3: The coordination of the S3 between regional and national levels as well as cross-regional
coordination.
The analysis compares the current situation between regions. It also compares the situation in each region
today and before 2014. It details the differences, explaining if and how the processes in place effectively
contribute to the intended smart specialization of the regions.
1.3 Organisation of the report
The report is organized as follows. Chapter 2 presents conceptual and methodological considerations. Chapter
3 proceeds with a detailed overview of S3 and governance structures at national and regional levels. Chapter
4 analyses whether an effective EDP is in place, including the engagement of the various stakeholders in the
initial definition stage of S3 and throughout the continuous enfolding of entrepreneurial discovery processes.
Chapter 5 assesses the existing monitoring and evaluation systems. The final chapter provides
recommendations and suggestions on how to change S3 governance, EDP and monitoring in order to improve
the next cycle of S3.
2
For more information see: https://s3platform.jrc.ec.europa.eu/ris3-in-lagging-regions
3
Lisbon and the Tagus Valley is the area of intervention for one of five mainland Regional Development and
Coordination Offices. However, since 2007 the Lisbon NUTS II statistical region (for allocation of the
European Structural and Investment Funds) does not include the Tagus Valley, which is part of the
Alentejo region. The Tagus Valley is therefore also included in the Alentejo S3.
112 Concepts and Methodology
This section introduces and briefly analyses the conceptual issues that are behind the questions and
assessment criteria relating to S3 governance, EDP and monitoring activities. It then lists the assessment
questions and describes the methods used to answer them.
2.1 S3 fundamentals
The S3 approach focuses on the deployment of innovative activity and the creation of new connections
among innovation actors within and beyond the region, enabling the region concerned to transform its
structures and develop new competitive advantages based on these transformations. Structural
transformations through innovation can lead to various outcomes – including the modernisation of traditional
industries, the diversification or transition of such industries towards new emerging markets and the radical
foundation of new (sub-) sectors.
The other policy rationale of S3 is to encourage regions to drive such transformations and thereby build new
competitive advantages on the base of their specific strengths, potentials and opportunities, rather than
doing as others do. Following this logic of regional differentiation, regions have a chance to yield better
results than those produced by homogenous recommendations of undifferentiated “best policy practices”.
Such non-differentiation had the adverse effect of countries and regions setting their sights on the same
“good things” to foster the same forms of innovation, which in the end proved to be inconsistent and
unrelated to the region’s existing assets and potential, and did not provide any comparative advantage.
To attain these very general objectives, three fundamental principles can be highlighted:
1. Concentrate on specific discovery priorities. This principle has two purposes:
- First, it aims to generate a certain density of actors and projects that are related as they are
dedicated to the same priority – an imperative condition to benefit from the resulting synergies,
complementarity and agglomeration, which are essential determinants of innovation, creativity
and R&D productivity.
- Second, this is also an important condition for a government to be able to reach the level of
input specificity required to support innovation in a given industrial or technological domain. This
has been a constant argument by Hausmann and Rodrik (2006) – that “the public inputs that
innovators require tend to be highly specific in the area in question. There are really very few
truly generic inputs for innovation”. But Governments cannot address all specific innovation
infrastructures and specific services for all markets and activities. Government capacities, both
in terms of information (what does each industry need in terms of specific inputs?) and
resources (can we afford the provision of all industry-specific public inputs for all sectors?), are
indeed limited. They need to choose.
2. Concentrate not on structures (for example, the region’s three most important industries) but on the
transformation of these structures. This principle has one main purpose, which is to allow for
preferential interventions, while minimizing distortions: it is not enough to be part of a targeted
structure (one particular industry) to be helped. It is also necessary to be involved in activities with
the potential to trigger a transformation process.
3. Favour a logic of bottom up and decentralized discovery, which means simply that the targeted
transformation process will not follow a path that is decided from the top, but will be discovered as
the process unfolds. Therefore, in principle, there is no need for ex ante plan; the “plan” will emerge
as the process enfolds. The importance of this principle is related to the recognition that no one
government can acquire innate wisdom or prior knowledge about the path to be followed, once a
priority area has been selected. A logic of decentralised discovery implies then flexible mechanisms
based on rigorous feedback and monitoring.
The S3 approach is thus marked by a high level of intentionality and strategic focus. But, it is also
characterised by a high level of discovery and initiative by the actors of the innovation process. It is this
combination of two policy logics – a planning logic and a self-discovery logic (frequently opposed in the
literature and in practice) – that constitutes its trademark
122.2 A three step guide to S3 and entrepreneurial discovery
The process of designing and implementing an S3 involves three fundamental steps:
1. Identifying thematic priority areas
2. Translating these priority areas into a roadmap of projects
3. Implementing the roadmap with an action plan.
Extensive experience of S3 design and implementation (between 2014 and 2020 the learning about specific
S3 policy practices, successes and failures has been massive), suggest that, for most regions, the first step is
not really where entrepreneurial discovery will kick in. At the initial S3 stage, selection of priority areas is not
done through a prototype Entrepreneurial Discovery Process (EDP). Step 1 involves the planning component
of the whole approach. All our observations of processes in the EU so far (including Portugal) show very
clearly that there may be no entrepreneurial discovery at this stage and what is needed is a more simple
participatory process. Having no entrepreneurial discovery here is not a problem because the S3 approach is
structured to involve two complementary logics of policy action – a planning mode and a self-discovery
mode. While clearly, the first step has a planning aspect, entrepreneurial discovery is rightly used to capture
what is happening in steps 2 and 3 – which involves the discovery of the path to transformation (within a
given priority area, or re-definition of the priority) and then the discovery of the characteristics and properties
of the experimental projects that have been identified and selected.
Identifying the locus of the entrepreneurial discovery process is important to help policy makers. Experience
with S3 so far shows that the recommendation of defining initial priority areas through an EDP did not help:
For many regions it was very difficult to follow and generated a high level of unnecessary stress for
policymakers. Such a three stage process makes it much easier for policymakers to understand and
implement – and it is more consistent with the concept of S3 having two logics of policy intervention4. In any
case, what matters is that S3 – which involves explicitly a planning component (prioritization and strategic
intentionality at step 1) - does recognize the existence of great uncertainty about the path to meet the
priority and the development of the projects – which implies relying on a logic of decentralized and
entrepreneurial discovery – at steps 2 and 3. In the following we bring a few qualifications about each step
of an S3 process
2.2.1 Identification of priority-domains
This is the starting point. Each identified priority-domain should associate one (or several) sector(s) with a
single direction of change. Indeed the essence of S3, which is an innovation policy and not a sectoral policy, is
to concentrate not on a structure (a sector) but on the transformation of a sector (or a set of sectors). Hence,
each priority domain includes one or several sectors as well as a direction of change. If both elements are
combined and sufficiently well-defined, they build a priority domain, a cornerstone of an S3.
The implication of such a definition is that not all actors will be part of S3 simply because they belong to a
specific sector. They need to belong to the sector while being contributing to the transformation process,
which is part of the definition of the priority domain. Beyond such association between a sector and a
direction of change, three other criteria need to be taken into account:
First, a delicate balance must be found between a too broad and a too narrow definition of the priority
domain. Too broad will make it difficult to generate the density and agglomeration effects, which is a crucial
objective of S3. While too narrow will result in the exclusion of many actors that were ready to be involved in
some kind of transformation and will ignore for instance the role of potential users or application sectors in
the considered transformation. A too narrow focus would simply concentrate resources and effort on a too
small number of pre-determined champions.
Second, the priority domain needs to reflect specific regional capacities (strengths and potentials) and
opportunities (innovation and megatrends). This is the simple concretization of the second raison d’être of S3
(above).
4
It is perhaps important to stress that no entrepreneurial discovery at step 1 does not mean no participatory
process. These two concepts are very different and of course the identification of priority areas need to rely on
the participation of many stakeholders – but this is not entrepreneurial discovery.
13 Third, the identification of priority domains needs to take into account the meaning of innovation
and innovative activities in the particular context of the region and the industries in question. As
Trajtenberg (2010) writes regarding innovation, “there is not only one game in town”. There are
many types of innovation-related activities and not all are about the generation of new to the world
advanced technologies. The fact that innovation-related actions – such as building up human capital,
adopting (not inventing) new technologies, diffusing novel management practices or generating
complementarities between key enabling technologies and traditional sectors – ultimately represent
the key to economy-wide growth in most regional economies; this fact needs to be reflected in the
choice of the relevant priority domains for a given region.
The identification of priority domains naturally relies on a considerable effort being made to acquire
statistical knowledge of the economy, assess its competitive position and define the innovation capacities of
the region. Furthermore, it requires a participatory process aimed at complementing statistical knowledge
with specific tacit knowledge at the micro level, resulting from bringing together the maximum number
possible of public and private stakeholders
2.2.2 Translating each priority into a transformational roadmap
This is certainly the most difficult step – which is about the operationalisation and implementation of these
priorities. Yet this is the crucial phase: the conversion of each priority into a more concrete transformational
roadmap to develop the corresponding transformational activities – a set of projects and actors – all
committed to following the same direction of change – and thus linked by this goal.
This conversion from priority area to transformational roadmap is a complex process. The problem can be
expressed thus: the priority is a specific transformation of a certain industry (for example the transition of
the mechanical and machine-tool sectors towards “industry 4.0”). In the beginning, the industry in questions
is at a given level of technology, employment and qualification, business model and performance. Based on a
S3 approach, the aim is to move the industry to a higher level of technologies, qualifications and economic
performance. Why has this level not already be reached? What constraints, market and coordination failures,
and other obstacles prevented this evolution? Some are obvious, or can be deduced by careful analysis, while
others remain hidden. It is during the identification and search for problem specifications and proposals for
removing the identified obstacles where entrepreneurial discovery kicks in. Project proposals and actors need
to address these problems and constraints that concern not only R&D, but also new skills and qualifications,
new forms of management, specific public goods (specialised services), adoption of certain key technologies
(diffusion), and so on. Projects can thus address very different issues. All of these diversified projects
constitute the transformative activity. A transformative activity can thus be defined as a collection of related
capacities, projects, activities and people that have been “extracted” from an existing structure or several
structures, to which extra-regional capacities can be added, and which is oriented towards a certain direction
of change.
We can add one important effect of this translation phase. It operates as a feedback mechanism to verify
the pertinence of the priority areas. If the transformative activity comprises only a few projects, projects that
are not very innovative or unconnected, it indicates that the priority was perhaps badly formulated or
premature, and therefore the region should go back to square one and discuss the pertinence of the priority
in question again.
2.2.3 Implementation with an action plan
The action plan step is about implementing the transformational activities. It involves mobilising and
coordinating financial instruments, which often have different objectives (R&D, training, infrastructure), as
well as evaluating projects to receive financial support.
One crucial element is allowing the plan to fit the profound logic of smart specialisation; the goal of the
funding agencies should not be selecting the best project for funding and development and rejecting the
others. The logic of S3 - as highlighted above - recognizes the value of a simultaneous support of
coordinated projects and investments – because potentials for systemic transformation are likely to result
entirely from the positive feedback effects that each project has on the others. In other words the various
14You can also read
